Question by ABC: Can somebody tell me how much risk involved in having your own company and doing software consultancy job?
I have pretty good experience in software programming. Apart from my full time job I would like to open up my own company and do consultancy job in my free time. But before doing so I want to know how much risk involved, how do I open (register) a company, what kind of tax do I need to pay for having a company and any other things to be concerned.

Best answer:

Answer by NC
The most important thing to consider is, you may be very good at programming, but how good are you at selling? Do you have customers lining up already? If not, what’s going to change once you start your consulting practice?

In your case, there’s not a lot of risk, since you probably have everything you need for your consulting practice and no additional investment is required. The worst thing that can happen to you in this situation is that you would be unable to find paying customers.

You don’t have to register a company if you don’t want to. You can do business under your own name (working as an independent contractor to your customers) or make up a company name (in which case it would be a sole proprietorship). If you want to form a corporation or an LLC, there will be annual franchise tax (depending on the state you are in, anywhere between $ 80 and $ 800), plus, for a corporation, corporate income tax (if you in fact have income).

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